What is a mortgage?
A mortgage is a form of secured loan whereby the borrower grants the lender a legal interest in real property, typically residential real estate, as collateral for the repayment of the loan. Upon the execution of a mortgage agreement, the lender registers a charge or encumbrance against the real property, thereby obtaining a proprietary right over the subject property.
What happens if you pull out of a mortgage?
In the event of the borrower’s default, the registered charge/mortgage confers upon the lender the legal right to initiate foreclosure proceedings and potentially take possession of the said property. Default may occur due to, inter alia, failure to remit payments in accordance with the terms of the mortgage agreement, or failure to comply with the borrower’s obligations regarding the maintenance and preservation of the property.
It is crucial to note that the satisfaction of the mortgage debt and full compliance with the terms and conditions of the mortgage contract does not, ipso facto, result in the automatic release of the lender’s interest in the property. In order to effect the discharge of the mortgage, a formal procedure must be undertaken. This process, commonly referred to as "discharging the mortgage," involves the execution and registration of a discharge document by the lender, thereby removing the charge or lien from the title to the property and extinguishing the lender’s legal interest therein.
Steps to Request a Discharge from a Financial Institution in Ontario:
Review your mortgage agreement:
Prior to requesting a discharge of charge, it is essential to ensure that all obligations under the charge agreement, including but not limited to any mortgage, loan, or contractual commitments, have been fully met. This may include confirming that all scheduled payments have been made, any necessary documentation has been submitted, and any additional conditions outlined in the agreement have been duly fulfilled. It is important to note that failure to complete these requirements may result in delays or the rejection of the discharge request.
What documents are required when requesting a mortgage payout statement?:
The bank or other financial institutions may require specific documentation to process your mortgage discharge request. Common documents may include:
Evidence of Full Payment: The financial institution may require documentation confirming the complete settlement of the loan, such as a final mortgage statement or a loan payoff letter issued by the lender.
Valid Identification Documents: In accordance with regulatory and security requirements, your bank or other financial institutions may request identification documents to verify the identity of the party submitting the discharge request. Commonly required documents may include a government-issued photo ID, such as a driver’s license or passport.
Additional Documentation as Stipulated by the Agreement: Depending on the specific terms of the loan agreement, further documents may be necessary, including but not limited to:
A formal discharge of lien.
A release of security interest or other relevant legal instruments that confirm the removal of the lender’s claim over the collateral or property.
Write a Formal Request:
Have our real estate lawyer in Toronto and Bowmanville draft and submit a formal letter directly to the lender requesting for a mortgage discharge statement.
Wait for Confirmation:
The financial institution will conduct a thorough review of your request to confirm that all requisite conditions have been duly met. Upon verification, they will initiate the discharge process. Following completion, you will receive formal written confirmation of the discharge, which may include, as applicable, a discharge of mortgage document, a release of lien, or other appropriate legal instrument, depending on the specific nature of the obligation.
What happens when you discharge a mortgage?
In the Province of Ontario, upon the full satisfaction of the debt or obligation secured by a charge (such as a mortgage or lien), the chargee (also known as the "lender") shall execute a discharge of charge document. This instrument formally attests to the complete satisfaction or discharge of the charge. Following its execution, the discharge document must be submitted to the Land Registry Office, or, in the case of properties governed by the Land Titles Act, to the applicable land registry system. Upon registration, the discharge is recorded against the title of the property, thereby effectively removing the charge from the public record.
In practice, the chargee will appoint a competent real estate closing lawyer to prepare and register the discharge on their behalf. Nonetheless, by following this process, you should be able to request and discharge a mortgage from the financial institution in a clear, formal, and efficient manner.
IMPORTANT NOTES:
How long does it take for a mortgage to be discharged?: Depending on the type of discharge (e.g., mortgage), the process may take a few weeks. Be sure to inquire about the expected processing time.
Is there a fee to discharge a mortgage?: There will be an Ontario mortgage discharge fee associated with the release of the mortgage or other security interests. Confirm any applicable charges with your financial instiution and lawyer.
Legal Assistance: If you encounter difficulties or require more specific legal advice, consider consulting with our discharge mortgage lawyer in Toronto and Bowmanville.
Red Booth Law
Estate Litigation | Probate | Wills & Trusts
Toronto | Bowmanville | 416 953 0040 | info@redboothlaw.com
NOTE: It's important to know that laws and regulations are subject to change, and the information provided in the article may not reflect the most up-to-date legal requirements. Before making any decisions or taking any action, it's essential to consult with a legal professional to ensure that you have the most current and accurate information.
The content provided on this website is for informational purposes only and should not be considered as professional legal advice. If you have specific questions or concerns about your situation, it's always best to consult with our estate lawyer who can provide personalized guidance.